How long does a 0% credit card stay interest-free?
These days, credit cards come in various different forms. Whereas in the past most cards would charge a high rate of interest right from the start, many credit card providers now offer a wide range of 0% interest credit cards that could effectively enable you to borrow money for free – for a limited period.
An advantage of a 0% credit card (and credit cards in general) over other forms of credit is flexibility. Apart from the minimum monthly payment (usually 2-5% of the balance), you can repay your debt as quickly or slowly as you wish. Make regular payments of the same size until the debt is cleared, or delay repaying the bulk of what you owe until the interest-free period is nearly finished – it’s up to you.
Interest-free periods vary from card to card, but they commonly last more than a year, and often as long as 16 months. A recently launched credit card from Barclaycard even offers a 17-month 0% interest period.
These deals can be ideal for anyone looking to borrow for a relatively short period of time, but to avoid paying interest altogether you must clear the balance before the interest-free period ends – or switch to a similar deal on another card. If you’re looking to repay what you borrow over a longer period, another form of credit such as a personal loan may be more cost-effective.
But a credit card expert at financial solutions company Think Money warns that interest-free periods aren’t the only thing you should consider when choosing a credit card.
“An interest-free credit card can be very useful in the right circumstances. It essentially gives the borrower extremely flexible repayment terms – great for making bigger purchases, such as household appliances or holidays. But borrowers must be sure they can repay the debt in full before the interest-free period ends if they’re determined to avoid paying any interest at all.
“There are plenty of other things borrowers should also consider. It’s also important to think about the interest rate that will apply once the interest-free period ends, for example, just in case you don’t completely clear the debt in time. Going from 0% interest to 18% can make quite a difference to the overall amount you’ll repay.
“Whatever the rate, you should always be confident you can afford your repayments before you borrow anything. A 0% interest period may be very attractive, but it shouldn’t be the only reason you decide to borrow that money.”
